Change to the Bright-Line Property Rule

1 July 2024

The Bright-Line Property Rule (also known as the “Bright-Line Test”) has been reduced to 2 years. This means that residential properties sold on or after July 1, 2024 will only be subject to the rule if owned for less than two years.

What is the bright-line rule?

The Bright-Line Property Rule is a tax rule that means if you sell a residential property within a set time period after acquiring it, you will be required to pay income tax on any profit you made through the property increasing in value. Properties that have been the owner’s main home for the entire time they owned it are exempt from the rule.

What’s changed?

The Bright-Line rule was first introduced in 2015. In 2021 the Bright-line period was extended to 10 years for residential property acquired on or after March 27, 2021 (and five years for qualifying new builds).

Effective July 1, 2024, the Bright-line period was reduced to two years.

How to find out more:

Head to the Inland Revenue website for information on the Bright-Line Test and the tax implications for buying and selling property

If you have questions related to the Bright-Line rule your first port of call should be your accountant or Inland Revenue.